Dirt in the Courts: a Summary of Recent Colorado Real Estate Caselaw
| Jurisdiction | Colorado,United States |
| Citation | Vol. 52 No. 2 Pg. 38 |
| Pages | 38 |
| Publication year | 2023 |
REAL ESTATE LAW
BY JOEY LUBINSKI AND REAGAN LARKIN
This article discusses recent real estate cases decided in Colorado appellate courts.
Real property, real people, real problems.[1] Over the course of the last year, courts in Colorado continued to weigh in on a variety of unique, often complex, real estate issues. This article summarizes some of the more recent notable appellate decisions from state and federal courts arising out of Colorado real estate transactions and ownership.[2] For ease of reference, cases are grouped by category.
Common Interest Communities
Several recent decisions dealt with issues related to condominium management and homeowners associations.
Condominium Associations
In Accetta v. Brooks Towers Residences Condominium Ass'n, the Colorado Court of Appeals addressed whether a pre-existing condominium community may be subject to the Colorado Common Interest Ownership Act (CCIOA) without following the exact statutory process for opting in to the statute.[3] As part of a longstanding dispute between a condominium unit owner and the condominium association regarding allocation of assessments for common expenses, Accetta argued the association's declaration violated three CCIOA provisions. Those claims, however, hinged on whether the condominium is subject to CCIOA, because only certain provisions of CCIOA apply to condominiums and other common interest communities formed before 1992. The condominium building was first subjected to a condominium declaration in 1979. However, the declarant did not sell any units and instead operated the project as an apartment complex. In 1995, the declaration was amended and restated in its entirety, and the amended declaration appeared to subject the community to CCIOA. Individual condominium units were then sold.
If CCIOA applied, then it appears the declaration allocation provisions were inconsistent with CCIOA's requirements. Accetta made two arguments for the applicability of CCIOA. The first was that by amending and restating the condominium declaration, a new common interest community was created in 1995 that was automatically subject to all provisions of CCIOA. The court rejected this argument on the basis that while the new declaration supplanted the 1979 declaration, it did not nullify it. Additionally, the court noted that both declarations covered the same real estate. Accetta's second argument was that the express references to CCIOA in the amended and restated declaration served to opt in to CCIOA. The court rejected this argument on the basis that section 118 of CCIOA provides the exclusive method for a preexisting community to opt in to CCIOA. Because the association had not followed all of the requirements of that statute, the amended and restated declaration failed to subject the regime to the provisions of CCIOA.
Notably, this is the second appellate decision resulting from a dispute between the same parties regarding the interpretation and application of the project's condominium declaration. The other decision—which also addressed whether dues allocations violated CCIOA—held that the association could adequately represent the interest of all 500 members of the association (without every member being joined as an indispensable party).[4]
Local Ordinances and CCIOA
The court of appeals took up another CCIOA issue in Town of Vail v. Village Inn Plaza-Phase V Condominium Ass'n,[5] addressing a 1987 ordinance passed by the Town of Vail that created use restrictions on certain property within the Village Inn Plaza development. Specifically, the ordinance required the following for condominiums created within the development: (1) the units must "remain in the short-term rental market," (2) the owners' personal use of the units must be limited during "high season," and (3) fines would be imposed for violation of the aforementioned restrictions.
In 1988, the association recorded a condominium declaration that included the restrictions of the 1987 ordinance. In 2013 and 2014, the board of directors of the condominium association amended its rules and regulations to state that the association would not enforce the provisions of the condominium declaration that incorporated the ordinance requirements. A commercial unit owner in the condominium then filed suit, alleging that the rule violated the condominium declaration. The town was joined as an indispensable party and then cross-claimed, alleging violation of the town ordinance. The association defended against the town's cross-claim on the basis that the ordinance in question violates section 10[6] of CCIOA, which prohibits any local ordinance that would "impose any requirement upon a condominium or cooperative which it would not impose upon a physically identical development under a different form of ownership."
The town first argued that this CCIOA provision was inapplicable because both the ordinance and condominium predated CCIOA's 1992 effective date. The district court and the court of appeals both determined that section 106 of CCIOA does apply retroactively under these circumstances because of the town's attempted present enforcement of the ordinance's restrictions.
The town next argued that even if CCIOA applied, the ordinance in question did not violate section 106 because it did not discriminate against the condominium form of ownership. Again, the court of appeals disagreed, finding that the ordinance's explicit applicability to only property that has been condominiumized was facially discriminatory against condominiums.
Finally, the town argued that CCIOA's restriction did not apply because the town is a homerule municipality and the ordinance reflected a matter of solely local concern. Again, the court of appeals disagreed, finding that enforcement of the 1987 ordinance was a matter of mixed local and statewide concern, specifically that CCIOA's attempt to create a uniform framework for condominiums implicated statewide concern and the potential for extraterritorial impact (i.e., the potential effect on other communities from Vail's enforcement) also implicated statewide concern.
Discrimination Claims and Housing Permits
The Tenth Circuit rejected allegations of discrimination under various federal and state laws in Sandy v. Baca Grande Property Owners Ass'n .6 In this case, Sandy owned property in a planned community where the governing documents required owners to obtain architectural control committee approval for construction of residences and outbuildings. Sandy applied for and received approval to build a residence. The permit was valid for only 18 months. Sandy started construction but did not complete the work before the permit expired. After four, six-month extensions and a separate one-year moratorium after suffering an injury, Sandy still had not finished construction. The architectural control committee then denied Sandy's request for a fifth extension.
Sandy alleged he was treated differently due to his race and nationality and alleged violations of 42 USC §§ 1981, 1983, and 1985; the Fair Housing Act; and similar Colorado laws. The court rejected Sandy's claims on the basis he had failed to show (1) joint action with a state official in violation a federal right (the Lugar test) and (2) that the alleged discrimination involved a real estate transaction or brokerage service covered by the Fair Housing Act (finding instead that the community's architectural control permitting and approval process did not implicate the FHA).
Condemnation
CORE Electric Cooperative v. Freund Investments, LLC involved an electric cooperative's condemnation for a permanent easement over 26 acres of property and a temporary construction
" On appeal, based on Colorado Supreme Court precedent, the court of appeals agreed that the subdivision development method was not an allowed appraisal methodology in condemnation. "
easement.[7] The landowner's appraiser used two methods of valuing the property—the sales comparison approach and the subdivision development method. The cooperative objected to the landowner's appraisal on the basis that (1) with respect to the sales comparisons, the appraiser did not communicate with the parties to the comparable sales to verify the sales amounts in the manner required by a condemnation statute,[8] and (2) the subdivision development method was not a permissible valuation method. The trial court excluded six of the seven comparable sales, finding that while the appraiser had personally examined the records for each comparable sale, he had verified the sale price with the parties to only one of the transactions. The trial court also ruled the subdivision development appraised valuation inadmissible as not permitted under the Colorado Supreme Court's rulings in prior cases finding that method to be too speculative.
On appeal, based on Colorado Supreme Court precedent, the court of appeals agreed that the subdivision development method was not an allowed appraisal methodology in condemnation. Although the court of appeals determined—notwithstanding the language of the condemnation statute—that the six excluded sales should have been admitted under the hearsay exceptions for public records, the court found no reversible error.
Property Damage
In Gregory v. Safeco Insurance Co. of America,[9]the Colorado Court of Appeals considered whether the notice-prejudice rule applies to a notice-of-loss provision in a homeowners' policy. Gregory's roof was damaged in a hailstorm, but she was unaware of the damage caused until a contractor inspected the roof 18 months later. Gregory subsequently submitted an insurance claim to her insurer, Safeco. Under Gregory's homeowners' policy, in the case of hail damage, the insured was required to provide notice of the claim...
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